The Chinese economy continued to recover strongly from coronavirus in the first quarter of 2021 when the country posted record annual growth, but these numbers mask the lingering losses caused by left last year translation.
China’s output soared 18.3% a year for the first three months, the fastest pace since records started in the early 1990s. High rates have been predicted because of the same year period. last Chinese economy sign the contract for the first time for decades when the country fell into a stalemate.
According to the National Bureau of Statistics, on a quarterly basis, the economy grew only 0.6%, much lower than expected.
However, official figures highlight a rapid recovery that has taken place in the Chinese economy since the first quarter of last year, when the city of Wuhan was first locked out of the outbreak.
The containment of subsequent coronavirus infections and frenzy industrial production meant that GDP growth in China was outpaced. pre-pandemic rate at the end of last year.
China benefits from being the first major economy out of lockdown, though the US is catching up quickly, fueled by the Biden administration’s $ 1.9 billion fiscal stimulus. The US economy is on track to regain its pre-pandemic production levels in the first half of this year.
In contrast, the euro zone is still grappling with an increase in coronavirus infection and the country’s closure is expected to drag the bloc into a double recession in the first three months of this year. Its GDP is not expected to return to pre-pandemic levels until mid-2022.
The IMF last week forecasted that by 2024, the US would be one of the few larger economies than before if the pandemic did not occur, based on previous estimates – while predicting both China and Europe will still be smaller.
China’s growth figures are released as the Xi Jinping administration prepares to mark the centenary of the founding of the Chinese Communist Party in July. During the celebration preparations, the party has favorably compared the virus management and strong economic recovery with the struggles of Western rivals, especially the US.
“We believe that the current recovery trend will continue throughout the year,” said Liu Aihua, an NBS spokesperson, at a press conference.
But the NBS also made a cautious note: “We must know that the Covid-19 epidemic is still spreading globally and that the international context is very complicated with high uncertainties and uncertainties”.
The spike in the first quarter, much higher than any period since the quarterly reporting began in the early 1990s, was once again aided by Industrial production. The index rose 24.5% in the first quarter, and along with the booming exports helped drive growth over the past year, although it missed expectations in March and was only 14.1% up from. same period last year.
Expansion is also supported by home consumption, which had previously lagged behind a broader recovery but is expected to play a greater role in driving growth this year. Retail sales beat expectations, up 34.2% in March, recovering from the shutdown a year earlier.
Eswar Prasad, a China finance expert at Cornell University, said even after taking into account the “ghost effect” of the low-base comparison from last year, the first quarter number was “clearly confirmed. on the resilience and motivation of the Chinese so economic “.
The focus in China has shifted to monetary policy, with signs of overheating across parts of the economy albeit consistently low. consumer price inflation. The government is trying to limit leverage in its real estate sector, as well as restraint record steel production rate after the construction boom.
Yue Su at the Economist Intelligence Unit said such fears would cause the government to limit its investment stimulus measures. “It is difficult for the authorities to quickly approve infrastructure investments in the second quarter even if economic activity slows down,” she said.
“The rebound will give the government more opportunity to ease the stimulus and strengthening macroeconomic policies,” said Prasad. [its] Focus on financial risk. ”
Several senior officials have warned of the threat of high property prices in recent months. Guo Shuqing, China’s top banking regulator, said in March that the country was exposure to “bubbles” in the international market and in our own real estate.
The Chinese stock market hit one the highest of all time in February but has lost 15% since. After releasing data on Friday morning, the CSI 300 of Shanghai and Shenzhen-listed stocks in the country went flat.
China’s recovery from the pandemic has also helped it dominate global trade, with exports increased monthly as of June 2020. In March, exports grew 30.6% in dollar terms over the same month a year earlier.
Despite year-over-year figures last year, officials and economists remain cautious about aspects of the recovery, as well as its pace from the previous quarter, when it rose 0.6. %.
Liu, an NBS spokesperson, noted that investment in manufacturing has yet to return to pre-pandemic levels. “Factories are having a lot of trouble in their operations,” Liu said.
Louis Kuijs, head of Asia economics at Oxford Economics, said: “The annual header data really doesn’t tell us the story of how the economy performed in the first quarter. . . In fact, the performance is a bit disappointing. It is worth noting that March is better than the first two months. “
Fixed asset investment grew 25.6% in the first quarter. The urban unemployment rate is 5.3%.
Additional reporting by Xinning Liu in Beijing and Tom Mitchell in Singapore